Question 1

When the price level falls

Accepted Answer

A)  households want to lend less. 
B)  the interest rate rises. 
C)  firms want to spend less on investment goods. 
D)  None of the above are correct. 
A)  households want to lend less. 
B)  the interest rate rises. 
C)  firms want to spend less on investment goods. 
D)  None of the above are correct. D

Question 2

The long-run aggregate supply curve shifts left if

Accepted Answer

A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct. 
A)  the capital stock increases. 
B)  there is a natural disaster. 
C)  the government removes some environmental regulations that limit production methods. 
D)  None of the above is correct. B

Question 3

The aggregate supply curve is upward sloping in

Accepted Answer

A)  the short and long run. 
B)  neither the short nor long run. 
C)  the long run,but not the short run. 
D)  the short run,but not the long run. 
A)  the short and long run. 
B)  neither the short nor long run. 
C)  the long run,but not the short run. 
D)  the short run,but not the long run. D

Question 4

Consider the exhibit below for the following questions.
Figure 33-1  
-Refer to Figure 33-1.If the economy starts at C,an increase in the money supply moves the economy

Accepted Answer

A)  to A in the long run. 
B)  to B in the long run. 
C)  back to C in the long run. 
D)  to D in the long run. 
A)  to A in the long run. 
B)  to B in the long run. 
C)  back to C in the long run. 
D)  to D in the long run.

Question 5

Consider the exhibit below for the following questions.
Figure 33-1  
-Refer to Figure 33-1.The economy would be moving to long-run equilibrium if it started at

Accepted Answer

A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct. 
A)  A and moved to B. 
B)  C and moved to B. 
C)  D and moved to C. 
D)  None of the above is correct.

Question 6

What do most economists believe concerning the relation between the price level and real output?

Accepted Answer

Most economists believe that in the long

Question 7

When the actual change in the price level differs from its expected change,which of the following can explain why firms might change their production?

Accepted Answer

A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices 
A)  both menu costs and mistaking a price level change for a change in relative prices 
B)  menu costs but not mistaking a price level change for a change in relative prices 
C)  mistaking a price level change for a change in relative price but not menu costs 
D)  neither menu costs nor mistaking a price level change for a change in relative prices

Question 8

Other things the same,a decrease in the price level motivates people to hold

Accepted Answer

A)  less money,so they lend less,and the interest rate rises. 
B)  less money,so they lend more,and the interest rate falls. 
C)  more money,so they lend more,and the interest rate rises. 
D)  more money,so they lend less,and the interest rate falls. 
A)  less money,so they lend less,and the interest rate rises. 
B)  less money,so they lend more,and the interest rate falls. 
C)  more money,so they lend more,and the interest rate rises. 
D)  more money,so they lend less,and the interest rate falls.

Question 9

Consider the exhibit below for the following questions.
Figure 33-1  
-Refer to Figure 33-1.In the short run,a favorable shift in aggregate supply would move the economy from

Accepted Answer

A)  A to B. 
B)  B to C. 
C)  C to D. 
D)  D to A. 
A)  A to B. 
B)  B to C. 
C)  C to D. 
D)  D to A.

Question 10

Stagflation results from continued decreases in aggregate demand.

Accepted Answer

A) True 
 B)False

Question 11

The aggregate-demand curve shows the

Accepted Answer

A)  quantity of labor and other inputs that firms want to buy at each price level. 
B)  quantity of labor and other inputs that firms want to buy at each inflation rate. 
C)  quantity of domestically produced goods and services that households want to buy at each price level. 
D)  quantity of domestically produced goods and services that households,firms,the government,and customers abroad want to buy at each price level. 
A)  quantity of labor and other inputs that firms want to buy at each price level. 
B)  quantity of labor and other inputs that firms want to buy at each inflation rate. 
C)  quantity of domestically produced goods and services that households want to buy at each price level. 
D)  quantity of domestically produced goods and services that households,firms,the government,and customers abroad want to buy at each price level.

Question 12

If speculators gained greater confidence in foreign economies so that they wanted to buy more assets of foreign countries and fewer U.S.bonds,

Accepted Answer

A)  the dollar would appreciate which would cause aggregate demand to shift right. 
B)  the dollar would appreciate which would cause aggregate demand to shift left. 
C)  the dollar would depreciate which would cause aggregate demand to shift right. 
D)  the dollar would depreciate which would cause aggregate demand to shift left. 
A)  the dollar would appreciate which would cause aggregate demand to shift right. 
B)  the dollar would appreciate which would cause aggregate demand to shift left. 
C)  the dollar would depreciate which would cause aggregate demand to shift right. 
D)  the dollar would depreciate which would cause aggregate demand to shift left.

Question 13

Optimism
Imagine that the economy is in long-run equilibrium. Then, perhaps because of improved international relations and increased confidence in policy makers, people become more optimistic about the future and stay this way for some time.
-Refer to Optimism.In the long run,the change in price expectations created by optimism shifts

Accepted Answer

A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left. 
A)  long-run aggregate supply right. 
B)  long-run aggregate supply left. 
C)  short-run aggregate supply right. 
D)  short-run aggregate supply left.

Question 14

Make a list of things that would shift the aggregate demand curve to the right.

Accepted Answer

Examples (and variations on examples)in

Question 15

When the dollar depreciates,each dollar buys

Accepted Answer

A)  more foreign currency,and so buys more foreign goods. 
B)  more foreign currency,and so buys fewer foreign goods. 
C)  less foreign currency,and so buys more foreign goods. 
D)  less foreign currency,and so buys fewer foreign goods. 
A)  more foreign currency,and so buys more foreign goods. 
B)  more foreign currency,and so buys fewer foreign goods. 
C)  less foreign currency,and so buys more foreign goods. 
D)  less foreign currency,and so buys fewer foreign goods.

Question 16

Make a list of things that would shift the long-run aggregate supply curve to the right.

Accepted Answer

Examples in the text (or variations)incl

Question 17

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

Accepted Answer

A)  decreased,so they increase production. 
B)  decreased,so they decrease production. 
C)  increased,so they increase production. 
D)  increased,so they decrease production. 
A)  decreased,so they increase production. 
B)  decreased,so they decrease production. 
C)  increased,so they increase production. 
D)  increased,so they decrease production.

Question 18

The effects of a higher than expected price level are shown by

Accepted Answer

A)  shifting the short-run aggregate supply curve right. 
B)  shifting the short-run aggregate supply curve left. 
C)  moving to the right along a given aggregate supply curve. 
D)  moving to the left along a given aggregate supply curve. 
A)  shifting the short-run aggregate supply curve right. 
B)  shifting the short-run aggregate supply curve left. 
C)  moving to the right along a given aggregate supply curve. 
D)  moving to the left along a given aggregate supply curve.

Question 19

When the money supply decreases

Accepted Answer

A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left. 
A)  interest rates fall and so aggregate demand shifts right. 
B)  interest rates fall and so aggregate demand shifts left. 
C)  interest rates rise and so aggregate demand shifts right. 
D)  interest rates rise and so aggregate demand shifts left.

Question 20

A decrease in the price level makes consumers feel wealthier,so they purchase more.This logic helps explain why the aggregate demand curve slopes downward.

Accepted Answer

A) True 
 B)False

Exam 33: Aggregate Demand and Aggregate Supply

When the price level falls

The long-run aggregate supply curve shifts left if

The aggregate supply curve is upward sloping in

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.If the economy starts at C,an increase in the money supply moves the economy

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.The economy would be moving to long-run equilibrium if it started at

What do most economists believe concerning the relation between the price level and real output?

When the actual change in the price level differs from its expected change,which of the following can explain why firms might change their production?

Other things the same,a decrease in the price level motivates people to hold

Consider the exhibit below for the following questions. Figure 33-1 -Refer to Figure 33-1.In the short run,a favorable shift in aggregate supply would move the economy from

Stagflation results from continued decreases in aggregate demand.

The aggregate-demand curve shows the

If speculators gained greater confidence in foreign economies so that they wanted to buy more assets of foreign countries and fewer U.S.bonds,

Make a list of things that would shift the aggregate demand curve to the right.

When the dollar depreciates,each dollar buys

Make a list of things that would shift the long-run aggregate supply curve to the right.

The misperceptions theory of the short-run aggregate supply curve says that if the price level is higher than people expected,then some firms believe that the relative price of what they produce has

The effects of a higher than expected price level are shown by

When the money supply decreases

A decrease in the price level makes consumers feel wealthier,so they purchase more.This logic helps explain why the aggregate demand curve slopes downward.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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